A Simple Guide to Paying Off Lingering Debt

www.usnewsIf you find yourself collecting more and more debt while struggling to figure out how you will ever pay it all off, it might be time to develop a step-by-step strategy. Paying off debt starts with making a budget and continues with changing your habits and rewarding yourself for progress. A few contributors to the U.S. News My Money blog offer a guide to get rid of the debt that’s been following you around for too long:

1. Create a budget.

“The first step to solving your debt problem is to establish a budget,” says Money Crashers contributor David Bakke.​ You can use personal finance tools like Mint.com, or make your own Excel spreadsheet that includes your monthly income and expenses. Then scrutinize those budget categories to see where you can cut costs. “If you don’t scale back your spending, you’ll dig yourself into a deeper hole,” Bakke warns.

2. Pay off the most expensive debt first.

Sort your credit card interest rates from highest to lowest, then tackle the card with the highest rate first. “By paying off the balance with the highest interest first, you increase your payment on the credit card with the highest annual percentage rate while continuing to make the minimum payment on the rest of your credit cards,” says retail analyst Hitha Prabhakar.

3. Pay more than the minimum balance.

To make a dent in your debt, you need to pay more than the minimum balance on your credit card statements each month. “Paying the minimum – usually 2 to 3 percent of the outstanding balance – only prolongs a debt payoff strategy,” Prabhakar says. “Strengthen your commitment to pay everything off by making weekly, instead of monthly, payments.” Or if your minimum payment is $100, try doubling it and paying off $200 or more.

4. Take advantage of balance transfers.

If you have a high-interest card with a balance that you’re confident you can pay off in a few months, Trent Hamm, ​founder of TheSimpleDollar.com, recommends moving the debt to a card that offers a zero-interest balance transfer. “You’ll need to pay off the debt before the balance transfer expires, or else you’re often hit with a much higher interest rate,” he warns. “If you do it carefully, you can save hundreds on interest this way.”

5. Halt your credit card spending.

Want to stop accumulating debt? Remove all credit cards from your wallet, and leave them at home when you go shopping, advises WiseBread contributor Sabah Karimi.​ “Even if you earn cash back or other rewards with credit card purchases, stop spending with your credit cards until you have your finances under control,” she says.

6. Put work bonuses toward debt.

If you receive a job bonus around the holidays or during the year, allocate that money toward your debt payoff plan. “Avoid the temptation to spend that bonus on a vacation or other luxury purchase,” Karimi says. It’s more important to fix your financial situation than own the latest designer bag.

7. Delete credit card information from online stores.

If you do a lot of online shopping at one retailer, you may have stored your credit card information on the site to make the checkout process easier. But that also makes it easier to charge items you don’t need. So clear that information. “If you’re paying for a recurring service, use a debit card issued from a major credit card service linked to your checking account,” Hamm suggests.

8. Sell unwanted gifts and household items.

Have any birthday gifts or old wedding presents collecting dust in your closet? Search through your home, and look for items you can sell on eBay or Craigslist. “Do some research to make sure you list these items at a fair and reasonable price,” Karimi says. “Take quality photos, and write an attention-grabbing headline and description to sell the item as quickly as possible.” Any profits from sales should go toward your debt.

9. Change your habits.

“Your daily habits and routines are the reason you got into this mess,” Hamm says. “Spend some time thinking about how you spend money each day, each week and each month.” Do you really need your daily latte? Can you bring your lunch to work instead of buying it four times a week? Or perhaps you can start cooking more at home. Ask yourself: What can I change without sacrificing my lifestyle too much?

10. Reward yourself when you reach milestones.

You won’t pay down your debt any faster if you view it as a form of punishment. So reward yourself when you reach debt payoff goals. “The only way to completely pay off your credit card debt is to keep at it, and to do that, you must keep yourself motivated,” Bakke says. Just make sure to reward yourself within reason. For example, instead of a weeklong vacation, plan a weekend camping trip. “If you aim to reduce your credit card debt from $10,000 to $5,000 in two months,” Bakke says, “give yourself more than a pat on the back when you do it.”

Don’t forget about First Financial’s free, online debt management tool, Debt in Focus. In just minutes, you will receive a thorough analysis of your financial situation, including powerful tips by leading financial experts to help you control your debt, build a budget, and start living the life you want to live.

*Article source written by Stephanie Steinburg of US News.

Frequently In Debt? Discover Your Personal Pitfalls

DebtManagement1.jpgYou don’t have to be a reckless spender to find yourself in debt. CNN touts that “one in three American adults have debt in collections.”

An Urban Institute study reported that 77 million people are so severely in debt that their account has gone to collections, while a Detroit Free Press article warns, “Young adults have more credit card debt than savings.”

Regardless of the angle, debt, severe debt – it’s an American epidemic.

So, how do you climb out of debt once and for all? Especially if you notice a recurring theme of continual debt-to-safety-to-debt wheel of fate, it is important to stop and analyze the causes for initial debt and the reasons for apparent insurmountable financial disease.

As with your medical health, financial heath is propelled by lots of hard work, dedication and realistic awareness. Denial will only perpetuate decaying health, physically or financially.

Step One: Take an honest assessment of your financial situation.

Before you can make a plan for diminishing debt once and for all, you have to understand the severity and expanse of the situation. Take into account all loans: student debt, mortgages and car payments. Know exactly how many credit cards you and your family have – make sure to count retail cards and reward cards in addition to traditional credit cards. Any plastic that can hold a debt/requires payment needs to be acknowledged forthright. Finally, collect all bills: anything that requires a payment plan or regular payment must be added into the mix. When you’re in debt, every $100 medical bill, $25 late fee for utilities or billed car repair must be accounted for.

Step Two: Take responsibility.

Playing the blame game or lying to yourself will not change the circumstances. Nobody cares if you don’t think it’s your fault. You owe the money. You have to pay the money. You can’t talk your way out of substantial debt. Take credit for your own shortcomings and accept the situation.

Step Three: Educate yourself and your family.

Money management is not an innate human skill. We are not born knowing how to allot, predict, and plan with 100 percent accuracy. And, sometimes, it is due to sheer ignorance that adults find themselves in debt. Whether or not a lack of financial education or money illiteracy is the root cause, understanding how credit works and how to budget are both beneficial life skills.

Step Four: Set realistic goals, with the end result being permanently digging yourself out of debt.

Each step should be attainable and based on practicality. However, do not fall into the mindset that “it’s going to take too long, so it’s not worth it.” Keep your eyes on the goal, but use baby steps to get there if necessary.

A good thing to do is to create a visual aid for you to help you along, like a financial plan. The important thing to remember is that your plan is a guide, not a crutch. It is a tool to keep you on track. Like any good guide, though, it can be tweaked to meet your needs and adjusted based on what obstacles you encounter on your journey to financial security.

Step Five: Perseverance.

It’s not an easy path. It’s not fun. The journey is oftentimes downright painful. But, avoidance and half-hearted efforts will not grant you the ability to squeak by. Debt can affect marriage, stress levels, relationships, and your future, but people often aren’t motivated enough to make a change. Many times, just climbing out of debt is not the largest challenge, it’s maintaining the healthy financial security that is attained through a debt-free life.

Don’t forget about First Financial’s free, online debt management tool, Debt in Focus. In just minutes, you will receive a thorough analysis of your financial situation, including powerful tips by leading financial experts to help you control your debt, build a budget, and start living the life you want to live.

*Original article source written by Joe Young of Nasdaq.

8 Signs You Have a Credit Card Problem

Credit troubles often begin inconspicuously, yet there are signs all along the way before they become unmanageable. Being alert to these warnings allows you to make the necessary changes to prevent a future of financial worries. Having a credit card isn’t bad when you use it for the right reasons. It serves as a bridge to better things and establishes a credit history, which helps you make big purchases such as a home or a car.

Unfortunately, the “spend first, pay later” option is a slippery slope that leads to serious credit problems. They can happen to people of every age, income level and social status. Many signs are obvious to conscientious consumers, but life can sometimes become so hectic that you push them aside for later. Only later never comes. The sooner you admit that you have credit problems, the sooner you are able to fix them. Neglect the issue and you may end up with accounts in collections, purchases repossessed, eviction and bankruptcy.

Watch out for these eight signs that indicate you are headed for trouble:

1. You never follow a budget. If you don’t budget, your spending can easily get out of control.

2. A bank denies your loan. It may mean that the creditor thinks you have too much existing debt already, even though your official credit score isn’t bad – yet.

3. You make late payments regularly. You face expensive penalties, increasing the size of your bills and your risk of falling into debt.

4. You use payday loans. If you resort to these short-term cash loans with high interest rates, you can soon land yourself into serious debt.

5. You buy essentials like food on credit. You’re living beyond your means if you charge essential expenses on credit cards and you can’t repay in full each month.

6. Your annual percentage rate (APR), the amount of interest you pay per year, rises. A higher APR means the lender considers you at greater risk of debt problems.

7. You can’t afford more than the minimum required payments. It’s a clear warning that you spend more on your credit card than your income can support.

8. You don’t have sufficient savings to cover emergency expenses. You risk racking up massive debt when you need to use your credit cards in emergency situations.

If you recognize these signs, you need to be serious about making changes, even to the point of altering your lifestyle. Examine every purchase and question its actual need. Limit your credit cards to emergencies and use cash for the majority of your expenses. Make a commitment to save a percentage of your income for an emergency fund.

Don’t forget about First Financial’s free, online debt management tool, Debt in Focus. In just minutes, you will receive a thorough analysis of your financial situation, including powerful tips by leading financial experts to help you control your debt, build a budget, and start living the life you want to live.

Article source courtesy of Kimberly J. Howard, AdviceIQ of you USA Today.

Is Your Rewards Credit Card Really Rewarding You?

cards_mastheadConventional financial wisdom for the last 10 years has been that you need a rewards credit card. Obviously, carrying a high revolving balance is bad, but if you pay your debt in full every month, it’s a no-brainer. You put all your expenses on your credit card, pay it off before you’re charged interest, and rack up those airline or other rewards. You cash those in for free flights, first class upgrades, restaurant gift cards, merchandise, and other perks.

There’s another bit of conventional financial wisdom, though: there’s no such thing as a free lunch. Free rewards sound great, but are you really getting everything you’re promised?

It might be time to take another look at your rewards card. Is it still the best bet for your money? If you’re thinking about cutting the card, check out these factors:

  • Is there an annual fee? If you’re paying money every year to use the card but you’re not getting more than that amount in rewards, your credit card is a losing proposition. Check your billing statement for this information – and don’t forget to check the fine print.
  • Is the interest rate extremely high? If you pay the balance in full every month, you might not ever think to check your interest rate. Suppose though, that something unfortunate happened – you or your spouse lost your job, you lost track of the date, or otherwise forgot to pay the bill. You could rack up significant finance charges on even one month’s expenses.
  • Is there a real grace period on interest? You might assume that if you pay your credit card bill before the end of the billing cycle that you wouldn’t get hit with any interest charges. This might have been the case when you first signed up, but the deal may have changed over time. Credit card disclosures are often difficult to read, so check them carefully.

If any of the above are making your rewards card less of a reward and more of a chore or added expense, it might be time to look closer to home for your credit card needs. Here at First Financial we offer a Visa Platinum Credit Card* with no annual fee, no balance transfer fees, a 10 day grace period, and a CURewards program where you can redeem points for gift cards, merchandise items, travel, and so much more! PLUS, we’re currently offering an introductory rate of 2.9% APR for the first 6 months on all purchases and balance transfers.**

Instead of counting on programs for rewards you may never see, put the money you save with our low-cost Visa Platinum Credit Card into a Holiday Club or Summer Savings account. Now that’s a real reward! Don’t forget to read all the important documents carefully, then pick up the phone. Our friendly staff will gladly help you make the switch. Speak to a First Financial representative today by calling 866.750.0100 or stop into any branch location.

*APR varies from 10.90% to 17.90% when you open your account based on your credit worthiness. This APR is for purchases, balance transfers, and cash advances and will vary with the market based on the Prime Rate. Subject to credit approval. No Annual Fee. Other fees that apply: Cash advance fee of 1% of advance ($5 minimum and $25 maximum), Late Payment Fee of up to $25, Foreign Transaction Fee of 1% plus foreign exchange rate of transaction amount, $5 Card Replacement Fee, and Returned Payment Fee of up to $25. A First Financial membership is required to obtain a VISA Platinum Card and is available to anyone who lives, works, worships, or attends school in Monmouth or Ocean Counties.

**The 2.9% promotional rate will apply to purchases and balance transfers only for six statement cycles from the new account holder’s initial balance and/or initial transfer to the First Financial VISA Platinum card. The balance transfer promotional rate does NOT apply to purchases or cash advances.

SOURCES:

5 Bad Credit Card Habits to Break Now

8044873-largeWe’ve all heard the advice: Use credit cards wisely. Still, knowing what’s smart and doing what’s smart can be two different things. And with an increasing number of U.S. young adults putting purchases on plastic – 57 percent of 18 to 34-year-olds say they use credit cards today, versus 48 percent in 2013, according to Mercator Advisory Group’s recent Customer Monitor Survey – that advice is worth repeating.

Are you guilty of any of the following five bad credit card habits? If you’re guilty of having any of these habits, it’s time to change your ways. Otherwise, stay far, far away from these behaviors:

1. Mindless charging. Some people use credit cards with the mindset that “it doesn’t count” if it’s paid for with plastic instead of cash. You need to think before you spend. You don’t want to have more than $100,000 in credit card debt and not qualify for a mortgage for your new home. Even if you’re able to clean up your credit enough to close on a home, you could face the possibility of foreclosure when trying to balance your credit card debt and your living expenses.

2. Paying only the minimum amount due. It’s understandable that if money’s tight, you may not feel like parting with hard-earned cents to pay down your credit card debt.

But you’re just hurting yourself in the long run. If you pay the minimum on credit cards, you’re extending the time period on everything that you buy. This is the main reason that people can build extraordinarily large credit card balances that they can’t hope to pay off. If you’re going to use your cards and carry revolving debt, you at least need to know that it’s going to be paid off within a time frame that works for you.

3. Adding to your revolving debt by making nonessential purchases. All revolving credit card debt should be avoided, of course. But if you’re carrying revolving debt on a credit card, and then your car breaks down, and you don’t have the money to pay a mechanic, you can make a good argument for whipping out your credit card.

You need that car to get to work, or to shuttle your kids around, and if you live in the suburbs or countryside, you probably don’t have a bus service to utilize. So, yes, getting the car fixed is essential. But buying a pair of shoes when you already have a closet full of them or going out to eat with a credit card that has revolving debt is a) problematic and b) not essential, says Albert Williams, a personal finance professor at Nova Southeastern University in Fort Lauderdale, Florida.

“This pay-later [plan] is really creating a loan that is interest-bearing,” Williams says. “This is a bad practice but people do it often.”

In other words, if you’re still paying off that mechanic six months from now, you probably won’t hate yourself. You needed that car fixed. If six months later, you’re still carrying debt on cheeseburgers, fries and shakes, every time you look at your credit card statement, you probably are going to experience indigestion.

4. Using your credit card for a cash advance. If you’re short on cash and you really want some actual bills in your wallet, it may be tempting to take out a little cash. But you might as well just rip it up. In fact, if you take out a cash advance from a credit card, not only will you pay interest, you may get a transaction fee, which could be as much as 5 percent of the cash advance.

You can pay back your credit card immediately, of course, if you get a cash advance that you immediately come to regret. But no matter what, you’ll end up paying the interest accrued on that cash – as well as the transaction fee.

5. Having too many credit cards. There are good reasons to have some credit cards, but it’s difficult to justify having lots of them.

Researchers say that the average number for most people with credit cards is four. However, once you get a credit card, you really have to live with it, since canceling the card can hurt your FICO score. That’s because a great deal of it is based on the equation of credit used over credit available. Try to have cards that equal the amount of credit that you can use and more importantly, can manage.

Leslie Tayne, a New York City-based attorney, debt specialist and author of the new book, “Life & Debt: A fresh approach to achieving financial wellness,” agrees that having too many credit cards is a bad habit consumers develop, thanks to all the store cards out there.

“I often see people with over 20 credit cards, all of which have balances,” she says. “This makes it hard to keep track of that many cards, for issuing payments on time.”

And balances, she adds, can quickly add up. That’s not to say that if you can replace your bad habits with good habits, you can’t benefit from these cards. “Store card discount incentives can be great if someone has a plan to pay off the balance,” Tayne says. And having a plan to pay off the plastic is generally the key to creating and maintaining good habits with credit cards. If all else fails, remember the universal rule of credit card usage: If you don’t pay it now, you’ll really pay for it later.

Don’t forget about our free, online debt management tool, Debt in Focus. In just minutes, you will receive a thorough analysis of your financial situation, including powerful tips by leading financial experts to help you control your debt, build a budget, and start living the life you want to live!

Article source written by Geoff Williams of US News.

Bad Credit Makes Everything Harder: How to Fix it and Start 2015 Off Right

07232014_Woman_Dollars_Lasso_Women_originalHaving poor credit definitely makes your life more expensive. Mortgages, car loans, insurance policies and a host of other items all carry higher rates if your credit score is low – which is why achieving and maintaining a solid credit score is a must for anyone who wants to improve their financial situation.

But higher expenses aren’t the only way a bad credit score can cost you. Renting can be more difficult, as landlords commonly pull a potential tenant’s credit score as part of the rental application process; many will dismiss renters with low credit scores without a second look. Finding the right credit card could also be a struggle, as there are fewer options for those with poor credit.

Here are three other lesser known ways that poor credit makes life more difficult – plus five tips to dig your way out of that:

1. Setting up utilities is more complicated.
For those with good credit, setting up utilities usually requires a simple phone call or two – but people with poor credit have to take extra steps. If your score is really awful, you may need to put down a deposit with each utility company to get your services started.

2. Getting a new job or promotion is more difficult.

Potential employers can’t view your actual credit score, but they can request an employment credit report, which omits your account numbers and personal information yet includes your payment history and loan information. In today’s employment market, a poor report could be the reason you’re rejected for a job or a promotion.

3. Starting a new relationship can be – complicated.
Not even your romantic life is safe from a bad credit score. Savvy consumers who are financially responsible know the potential impact of a partner’s bad credit on their own finances. According to a 2014 NerdWallet analysis, 53 percent of single adults over age 25 say they are “somewhat less likely” or “much less likely” to go out with someone with bad credit.

Though bad credit can be a heartbreaker in more ways than one – you can fix it. Here are five ways to raise your credit score:

  1. Pay your bills on time – no exceptions, no excuses. This is far and away the most important thing to build and maintain good credit.
  2. Avoid using more than 30 percent of the available credit on your cards during the month, say many experts. Monitor your balance carefully throughout your billing cycle and make a payment if you start to get too close to that threshold.
  3. Start using credit as soon as you can. The easiest way to do this is to get a credit card and use it responsibly and consistently.
  4. Only apply for credit you actually need – too many hard inquiries in the span of just a few months will ding your score.
  5. Use AnnualCreditReport.com to obtain a copy of your three credit reports once per year. Review them, carefully, for accuracy; if you spot an error, start the process of having it corrected as soon as you can.

Don’t forget about our free, online debt management tool, Debt in Focus. In just minutes, you will receive a thorough analysis of your financial situation, including powerful tips by leading financial experts to help you control your debt, build a budget, and start living the life you want to live. Feel free to check out our interactive financial calculators – we even have ones for Credit Cards and Debt Management!

Original article source by Lindsay Konsko of The Fiscal Times.